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Profit and Loss 


What exactly is profit or loss?

Gross margin is defined as the difference between the Selling price and the cost price of a commodity. This gross margin can either be profit or loss. If the result is positive, it is a profit; if it is negative, it is a loss.

Profit is calculated by deducting direct and indirect costs from total sales. Purchases such as materials and employee wages are examples of direct costs. When the cost price is greater than the selling price, and the difference represents the loss.

How do I figure out my profit per unit?

Subtract the product's cost from the item's sale price. For example, if you sell an item for Rs 300 and your company spends Rs 220, your profit per unit is Rs 80.

The average profit is defined as the total profit divided by the output or the sum of overall profits periods divided by the number of periods.

What exactly are the profit-and-loss formulae?

  1. Profit or Gain = Selling price – Cost price.
  2. Loss = Cost price – Selling price.
  3. Profit Percentage = [Profit/C.P.]×100.
  4. Percentage Loss = [Loss/C.P.]×100.
  5. C.P. = ( S.P. * 100 ) / ( 100 + percentage profit).
  6. Loss % = Loss/Cost Price × 100.
  7. Selling price = (cost) + (desired profit margin).
  8. Average revenue – average cost = average profits.

Examples of Profit and Loss

If a shopkeeper buys a cloth for Rs.150 and sells it for Rs.180, he has made an Rs.30 profit. If a salesperson buys a textile material for Rs.450 and has to sell it for Rs.350, he has made a loss of Rs.100.

What is the formula for calculating normal profit?

When calculating normal profit, we consider total revenues. The terms "sales" and "total costs" are used in accounting, where the latter includes both direct and indirect costs. Normal profit is different from economic profit. Economic Profit is zero when a company has a turnover which is equal to its indirect and direct costs, however, a normal profit is registered in such a case .

Is the market price and the selling price the same?

The price on an article's or product's label is referred to as the marked price or list price. This is the price at which the product will be sold. However, a discount may apply to this price, and the actual selling price of the product may be less than the market price.

What is the cost per unit?

In retail, a unit price is a price for a single commodity among products sold in quantities greater than one unit. The "unit price" of a food package tells you how much it costs per pound, quart, or another unit of weight or volume. It is usually displayed on the shelf beneath the food.

What is the bare minimum for sale?

The minimum selling price is used to prevent items from being sold at a loss. The minimum sell price can be expressed as an amount or as a percentage of the base cost.

How much does it cost to sell?

The selling price is the sum paid by a buyer for a product or service. The price can differ depending on factors like how much amount the buyer is ready to pay, what amount the seller is asking for, and how the price compares to other businesses in the market.

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